Inflation continues to decline as temperatures rise
As we head into the dog days of summer and heat records are broken around the world, Canadian inflation is heading in the opposite direction. Statistics Canada released that the annual increase in the Consumer Price Index (CPI) decreased to 2.7% in June. As inflation continues to decline, it generally indicates that the Bank of Canada's monetary policy is working.
June 2024 consumer price index highlights
Key takeaways from the monthly CPI report are:
- Core CPI (excluding food and energy) remained stubbornly higher than headline CPI, coming in at 2.9%.
- Housing continued to dominate the inflation picture, with prices up 6.2%.
- Services, the other main source of inflation, rose 4.8%.
- Durable goods prices fell sharply, falling at an annualized rate of 1.8%.
- Similarly, prices of clothing and footwear decreased by 3.1%.
- Gasoline prices fell 3.1% from May to June, and have been largely stable over the past year.
- Food prices rose at an annual rate of 2.1%, lower than the overall CPI figure.
Business and personal surveys point to lower inflation expectations going forward, and are key indicators that the Bank of Canada (BoC) has succeeded in curbing the dire inflation conditions. In the early 1980s there was a rise in the price of denim and very high interest rates. While the fashion of the '80s may be back, it's clear that the monetary policy of the era is not.
Inflation is welcome news for most Canadians, but it's perhaps cold comfort for those with mortgages due this month. The country as a whole may be very happy that demand-driven inflation is falling, but that means: “People have very little money to spend on many things because their mortgage or rent payments just went through the roof.”
Lower inflation rates and reduced deflationary sentiment should enable the BoC to continue to slowly but surely cut interest rates in the coming months. It would be a shock if the BoC does not cut interest rates by 0.25% when it makes a decision next week.
To check the effects of current inflation rates, use this table.
Read more: Canada's inflation rate falls to 2.7% in June, raising hopes for July cuts
Netflix subscribers must be indifferent to TV commercials
Earnings day went largely as predicted for Netflix last Thursday, as revenue and earnings were very close to the company's guidance for the previous quarter.
Netflix's best movies
Financial figures in this section are reported in USD.
• Netflix (NFLX/NASDAQ): Earnings per share of $4.88 (vs. $4.74 forecast). Revenue of $9.56 billion (compared to an average of $9.53 billion).
Netflix sold more memberships than predicted (277.65 million versus 274.40 million). A big part of that subscriber growth was in its advertising-supported space. Markets appeared to take the news lightly, as share prices were sharply lower in after-market trading.
Netflix CEO Ted Sarandos highlighted the company's focus on advertising going forward, saying the broadcaster will no longer work with Microsoft. Instead, it invests in its own land. He also pointed out that Netflix's focus on live sports will attract more ad dollars, specifically citing NFL games on Christmas Day as key opportunities. He sums up the company's push into live sports saying, “We're live [TV] because our members love it, and it drives great engagement and great excitement… and the good thing is that advertisers love it for the same reason.”
With Netflix up more than 43% this year, and with a price-to-earnings (P/E) ratio of over 44, one could make the argument that the stock is reasonably priced, and that it would need to technically execute future growth plans to have any. opportunity to justify that high price.
Source link
